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4 ways to reduce your credit card debt

Once you get past the fact that you don’t actually pronounce the B in debt, one of the trickiest parts of the word is how to get rid of it.

Australians love to make the most of the benefits and perks of credit cards. A recent report from comparison website Finder put our debt figure at $52 billion by the end of 2014. As at January 2014, the average Australian credit card had a debt of $3,147 – something most people would probably like to bring down a notch or two.

Try any, all, or a mix of the following four tricks of the trade to help reduce your credit card debt.

Make the minimum repayments

Once you’ve got a debt on your credit card you will be obliged to make repayments.

One benefit of a credit card is that you don’t have to repay it all at once. But the drawback is you will be charged interest on any outstanding balance. Importantly, if you don’t make the minimum payment, you may incur additional fees as well.

To avoid a case where some of your debt is made up of overdue fees, plan to have enough to cover minimum payments. Of course, if you can fit ‘paying off more credit card debt’ into your budget, that will help too!

Interest-free periods

Those interest-free periods on your cards aren’t just promotional tools that sound good for advertising – they can help you better manage your money.

If you’ve got a 44-day interest-free period on your card, every eligible purchase could receive up to 44 days interest free.

Note that you should aim to pay off your entire balance within the interest free period, not just the minimum payment due. This is because if you carry a balance into the next billing cycle, you may lose your interest free benefit for the following billing cycles. Be sure to read the terms & conditions of your credit card in order to better understand how your individual interest free period works.

Balance transfers

Stop pretending to be a tight-rope walker by balancing your tricky debts.

Many providers will periodically offer a 0% or low % balance transfer rate for a specific time frame. This will allow you to move your debt to a card with a lower interest rate for an agreed time (provided you pay the minimum monthly due) giving you some space to breathe and time to repay some of that debt without the interest pushing it higher. Note that with balance transfers you will generally still need to meet the minimum repayments, and other conditions may apply. Review the terms and conditions of any balance transfer you may be looking at taking, and figure out how much you could save with our balance transfer calculator.

This information is of a general nature only and does not take into account your personal financial situation, needs or objectives. As we don’t know your financial needs we can’t advise if our products will suit you. Please consider the relevant Product Disclosure Statement and/or Terms and Conditions available at virginmoney.com.au before making a decision about the product.